African Gold Group – A Golden Opportunity
African Gold Group is a Canadian exploration and development company aiming to develop a gold platform in western Africa. The company’s focus is on the construction-ready Kobada Gold Project in Mali and on advancing its second project currently under option towards a maiden resource, the Madougou Gold Project in Burkina Faso.
African Gold Group (AGG), in existence for a number of years under various management, reached a turning point in 2019 when a new management team was appointed, headed by the new president and company CEO Danny Callow, a mining engineer by background with ample experience in building and operating mines in Africa. Soon after, Callow appointed a new independent Board.
“When I came to the company last year, I realised a significant amount of work needed to happen to take Kobada from an exploration asset into a construction-ready asset. We re-commenced exploration, did a lot of data analysis and embarked on a process to deliver an independent Definitive Feasibility Study (“DFS”) with the aim of upgrading the asset’s geological model and understanding of the ore body. This we completed in July 2020 on time and 20% below budget.”
African Gold Group’s (AGG) Kobada Gold Project in Southern Mali is a low capital and low operating cost gold project with the potential to produce more than 100,000 ounces of gold per annum over 10 years of mine life.
The asset is located approximately 125 km south-west of Bamako, the capital city of Mali, in the Birimian Greenstone belt, with excellent transport links to the capital Bamako, and excellent logistics routes via other West African ports. Favourable aspects include the fact that the Malian government is an investor-friendly, stable mining jurisdiction and all of the major gold companies are operating in Mali.
“Based on limited exploration drilling on only 4 km of the 30 km of identified structural shear zones on the property, we have delineated a 2.3-million-ounce resource and believe there is significant potential to improve the resources and reserves further with limited additional exploration. We have an advanced process plant design, we are fully permitted until 2045 and environmental permits renewable every five years, and we are ready for construction,” affirmed Mr Callow.
“The DFS confirmed the assumed benefits – very low operating cost, definitely in the lower quartile for west Africa at $704/oz, with a very competitive All-In Sustaining Cost (“AISC”) of US$782/oz. This relates to a post-tax NPV of more than US$226 million (now more likely 400 at current gold prices) and an IRR of around 41%. Part of our challenge is to get the message out there that we have a construction-ready asset which presents a great investment opportunity.”
Going forward, AGG has spent a lot of effort on environmental considerations, which are absolutely key for any mining operation, said Mr Callow. “Almost all mines in Mali are powered by diesel generators. This is expensive and costly for the environment. We decided to take a different approach.”
In June 2020, AGG entered into a partnership with DRA Nexus to implement a hybrid power plant combining photovoltaic solar panels (“Solar PV”), thermal generators and a battery storage system for the Kobada Gold Project.
“The advantages are numerous, but at the highest level, we are employing experts in power generation to provide their technology in an over-the-fence power solution. The project will bring significant annual power savings over a conventional thermal power system of more than 22%, or $5 million on the cost of power, and will result in significantly reduced emissions, meaning a sizeable reduction in our environmental footprint.”
This landmark installation will enable AGG to increase the environmental sustainability of the Kobada Gold Project, in turn differentiating AGG from its peers and potentially attracting partnership opportunities from green energy funds, socially responsible investment managers, family offices and endowment funds.
Similarly, the company takes its corporate social responsibility very seriously. “We want to be operating Kobada mine for 15+ years and therefore it is imperative that we are GOOD neighbours,” affirmed Mr Callow.
“Good neighbours means employing skills locally, developing the local economy so prosperity and wealth flow back into the region and quality of life is improved for all, in other words, developing a local ecosystem. Communication is key – we have already started the process on-site with meetings held with the local community chiefs and agreed how we could contribute to local development and we are already succeeding.”
“My aim is to grow the prosperity in our local communities, partner on projects that are mutually beneficial and ensure that we have a healthy, safe and active workforce and the local community that benefits from our presence in the region.”
AGG has a clear strategy for the years ahead. The overall investment for the mine will be $140 million plus additional expenditure on the exploration of around $10 million over the next 3-4 years. At the same time, the company is continually looking at other concessions and investments and sees itself as growing into a multiple-asset, multiple-country operator over the next 5 years.
The plan is to advance its second project currently under option towards a maiden resource, the Madougou Gold Project in Burkina Faso, currently in mid-stage exploration, which is viewed as a highly strategic asset with tremendous potential.
“The historical drilling results have been very good and we believe that there is a great opportunity for this asset to be our second producing mine. As soon as we start construction on Kobada, we will start to drill the Madougou asset. The ultimate aim is that this would be our second asset for production.”
Summarising the company’s prime objective, Mr Callow affirmed that the primary focus is to bring the Kobada asset into production within 24 months. “We see great opportunities for African Gold Group to grow the company very quickly over the next 12-18 months, and are looking at adding at least 2-3 more assets to our portfolio. With the very ambitious and competent management team, I’m sure we can achieve that.”